Rand Capital Announces Fourth Quarter and Full Year 2017 Results

Invested $5.4 million in one new portfolio company and eight
follow-on transactions during the year

Net Asset Value per share increased sequentially to $5.05 at
December 31

Improved $0.09 per share on portfolio and operating
performance

Unfavorably impacted by $0.05 per share due to reduction in
federal tax rates

BUFFALO, NY--(BUSINESS WIRE)--
Rand
Capital Corporation (NASDAQ: RAND) (“Rand”), a venture capital
company which invests in growth businesses with unique product, service
or technology concepts, announced its results for the quarter and year
ended December 31, 2017.

Allen F. (“Pete”) Grum, President and Chief Executive Officer of Rand
Capital, commented, “We finished 2017 with a strong year of investments,
totaling $5.4 million. We made great progress in structuring those
investments to increase our investment income. Our net investment
income, along with net increases in realized gains and unrealized
appreciation on certain investments favorably impacted net asset value
per share during the third and fourth quarters of 2017.”

He continued, “As a result of the Tax Cuts and Jobs Act, federal tax
rates decreased to 21% from 35%. During the fourth quarter, we were
required to revalue our deferred tax assets based on the new, lower
rates, resulting in a write-down amounting to $0.05 per share. As we
monetize and exit portfolio companies in the future, we will
significantly benefit from the lower tax rates beginning in 2018.”

Mr. Grum added, “We continue to work with the U.S. Small Business
Administration (SBA) to finalize an arrangement for additional SBA
capital.”

Fourth Quarter and Full Year 2017 Financial Highlights

Reported $5.05 net asset value (NAV) per share at December 31, 2017,
compared with $5.01 at September 30, 2017. The sequential improvement
was driven by higher investment income, realized gains and unrealized
appreciation on investments. These were partially offset by $0.05 per
share to revalue the Company’s deferred tax assets at new, lower
federal tax rates.

The fourth quarter included $1.5 million invested as a follow-on
in Tilson Technology Management, Inc.

During the fourth quarter, Rand sold its position in Athenex, Inc.,
generating approximately $781,000 of gross proceeds and realizing a
$638,000 pretax gain.

Investment income increased 26% and 41% over the prior-year fourth
quarter and full year, respectively.

At December 31, 2017, portfolio fair value was $32.3 million and
consolidated cash was $6.3 million.

Total investment income in the fourth quarter of 2017 grew to
approximately $380,000, up from approximately $301,000 in the fourth
quarter of 2016. The $79,000 increase was driven by the Company’s
success with focusing investments in income producing instruments. Total
expenses in the 2017 and 2016 fourth quarters were approximately
$448,000 and $486,000, respectively.

Total investment income was approximately $1.5 million and $1.0 million
for the years ended December 31, 2017 and 2016, respectively. Similar to
the fourth quarter, the growth was driven by the Company’s recent
investment focus on income-generating instruments. Total expenses for
the year were approximately $2.0 million in 2017, down from $3.4 million
in 2016. The 2017 expenses included approximately $133,000 associated
with the Company’s application process for its second SBIC. The 2016
expenses included higher incentive compensation expenses related to the
Company’s Gemcor exit.

Selected Portfolio Highlights

Tilson
Technology Management, Inc. is an award-winning, veteran owned
IT professional services and network deployment firm. The company
primarily operates in two fast growing markets: 1) network deployment
for cellular carriers, utilities, and governments; and 2) consulting
for construction IT, broadband and energy, and government
institutional markets. Recognized for its sustained high growth,
Tilson has been on the prestigious Inc. 5000 list of
fastest-growing private U.S. companies for seven consecutive years,
from 2011 through 2017. As a result of this distinction, Tilson joins
a select group of firms on the Inc. 5000 ‘Honor Roll,’ a
milestone which just two percent of the Inc. 5000 companies
ever achieve, according to the publisher. Tilson has grown more than
410% to become one of the top 25 telecommunications firms on the list
as of 2016. During the fourth quarter of 2017, Rand invested $1.5
million in both debt and equity capital, to support Tilson’s ongoing
growth. This represents Rand’s third investment in Tilson since its
initial investment in January 2015. At December 31, 2017 Rand’s
investment in Tilson was valued at $2.5 million.

Carolina
Skiff, LLC is a leading manufacturer of high quality,
versatile outboard boats, including the #1 fiberglass outboard brand
within their size range. Offering more than 60 models, Carolina Skiff
boats provide the most features and the best functionality available.
The company has an established footprint with 94 dealers across 23
states. Since 2014, revenue and EBITDA have grown at compound annual
growth rates exceeding 9% and 27%, respectively. Rand initially
invested in Carolina Skiff in 2004. The company’s recent strong
financial performance has driven Rand to increase its carrying value
by $650,000 during the fourth quarter, resulting in a carrying value
of $1.75 million in Rand’s portfolio as ofDecember 31, 2017.

GiveGab,
Inc.provides a user-friendly social platform that
cultivates long-term giving relationships by connecting donors and
volunteers with nonprofits. The GiveGab team helps nonprofits thrive,
providing an affordable, secure and customized way to engage with
supporters, raise funds online, and manage data. In January 2018,
GiveGab announced that they acquired Austin, Texas-based Kimbia.
This synergistic acquisition results in significant growth for
GiveGab, especially driven by Kimbia’s Everyday Giving solution. The
combination of these two organizations allows them to benefit from
each other’s knowledge and experience, resources, and customer base.
At December 31, 2017 Rand’s investment in GiveGab was valued at
approximately $424,000.

As of December 31, 2017, Rand’s portfolio consisted of 30 active
companies. At that date, the portfolio was comprised of approximately
58% in equity investments and 42% in debt investments, compared with 64%
in equity investments and 36% in debt investments at December 31, 2016.
The change in investment mix reflects Rand’s strategy to generate
sufficient investment income to cover operating expenses.

Webcast and Conference Call

Rand will host a conference call and live webcast today, March 8, 2018,
at 1:30 p.m. Eastern Time to review its financial condition and results
for the 2017 fourth quarter and full year, as well as its strategy and
outlook. The review will be accompanied by a slide presentation which
will be available on Rand’s website at www.randcapital.com
under the heading “Investor Relations.” A question-and-answer session
will follow the formal presentation.

Rand’s conference call can be accessed by calling (201) 689-8263.
Alternatively, the webcast can be monitored on Rand’s website at www.randcapital.com
under the heading “Investor Relations.”

A telephonic replay will be available from approximately 4:30 p.m.
Eastern Time today through Thursday, March 15, 2018. To listen to the
archived call, dial (412) 317-6671, and enter conference ID number
13675501. A transcript of the call will be placed on Rand’s website,
once available.

ABOUT RAND CAPITAL

Rand Capital (NASDAQ: RAND) provides investors the ability to
participate in venture capital opportunities through an investment in
the Company’s stock. Rand is a Business Development Company (BDC) with a
wholly-owned subsidiary licensed by the U.S. Small Business
Administration (SBA) as a Small Business Investment Company (SBIC). Rand
focuses its equity investments in early or expansion stage companies and
generally lends to more mature companies. The Company seeks investment
opportunities in businesses with strong leaders who are bringing to
market new or unique products, technologies or services that have a high
potential for growth. Additional information can be found at the
Company’s website where it regularly posts information: http://www.randcapital.com/.

Safe Harbor Statement

This news release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements concerning future
net asset value growth, investment returns and opportunities as well as
Rand’s plans for utilizing proceeds from sales of portfolio companies
when and if received.These statements involve known and unknown
risks, uncertainties and other factors that could cause the actual
results to differ materially from the results expressed or implied by
such statements, including general economic and business conditions,
conditions affecting the portfolio companies’ markets, competitor
responses, and market acceptance of their products and services and
other factors disclosed in the Corporation’s periodic reports filed with
the Securities and Exchange Commission.Consequently, such
forward-looking statements should be regarded as the Corporation’s
current plans, estimates and beliefs.The Corporation assumes no
obligation to update the forward-looking information contained in this
release.